If you are self-employed and looking to renew or take out a new mortgage then follow these eight top tips to ensure that you get the best mortgage for you.
First of all, it’s important if you are looking to get the best deal that you start planning well before you need the mortgage. The financial advice below will help get you started.
Tip 1. Get your accounts up to date.
In most cases, you will need two years of recent accounts although some lenders will look for just one year. Ask your accountant to put them together. Let your accountant know that you are looking to raise funds for a mortgage so that he can present your figures in a way that will help you show that you can afford the mortgage repayments. Make sure that you understand the figures.
An SA302 form, from Her Majesty Revenue and Customs (HMRC) of your income, maybe preferred by some mortgage lenders. These can take a few weeks to arrive, so request them in good time.
Tip 2. Income is key.
Keeping money in your business may be good for your business or reducing your tax. However, increasing your drawings or taking larger dividends may help your mortgage application. It may also mean that you increase your savings so that you can offer a larger deposit. When you have moved into your new home you can always amend your income in line with your new outgoings.
Tip 3. The bigger the deposit the better.
A larger deposit nearly always means lower rates. This applies to all mortgage applications not just for the self –employed. The key percentage deposits are typically 10 %, 25% and 40 %. If you can save a little bit more to get you into the next band, it usually pays off.
Tip 4. Don’t change the structure of your business.
Changing the structure of your business, say from sole trader to Limited Company may affect the way your application is assessed. Lenders like continuity and stability. If you cannot delay the changes wait for the new structure to settle down before applying for that mortgage.
Tip 5. Other sources of income.
It can make sense for your salaried partner to be the first name on the mortgage application. Although their salary might not be as high as your income, the fact that it’s predictable and regular will be looked at more favourable by the lender. Ask our independent mortgage adviser if this option would work for you.
Tip 6. Not all lenders are the same.
All lenders look at applications in different ways. Some look at operating profit and retained profits, while others will look at salary and dividends. So, when one mortgage company says “No” another may say “Yes”. This is where the knowledge and expertise of our mortgage advisers come in to help.
Tip 7. Review your credit score.
A lot depends on your credit score. Having a history of credit and paying it off on time is seen as a positive. A blip in your credit history through a marriage break down or redundancy can often be worked through. The lender often just wants to understand the background. Was this just a one-off event or is there an underlying problem?
If you are aware of any credit issues, talk this through with our mortgage adviser as it will save time and save you from unnecessary declines.
Ask your mortgage adviser how you can improve your credit score. Remember that this can often take more than six months. Follow this link to our website to get a free Experian credit search.
Tip 8. Use an Independent Mortgage Adviser.
All our mortgage advisers have great knowledge of self-employed mortgages. They will try to anticipate any problems in advance and offer unbiased advice from the whole of the market. We provide independent mortgage advice. This reduces the chances of having your application declined. One declined application is unlikely to affect your credit score but a number of them might. Seeing one of our advisers increases your chances of getting the mortgage that’s best for you, the first time.
How we can help you with your self-employed mortgage.
We are a firm of independent mortgage brokers. This means that the advice we offer is unbiased. We look at all the financial options available to you to recommend the best mortgage for you. Current mortgage rates can be seen on our website. These rates are updated daily. It is worth remembering that the lowest interest rate is not always the best overall deal for your circumstances.
Why not contact us today. The initial meeting is free and without obligation so why not find out how we can help you.
With the current need for social distancing, we can arrange a meeting by using video conferencing, such as –
- Microsoft Teams
Telephone meetings may also be arranged. Whatever is best for you. There is no need to visit an office as all work can be handled remotely.
Our offices are located at-
- Kettering, Northamptonshire
- Stamford, Lincolnshire
- Towcester, Northamptonshire
- London, Greater London
The information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone. Anstee & Co is authorised and regulated by the Financial Conduct Authority (FCA).
AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.